THE continuing sluggishness of the US economy has burdened the growth of the Philippines’ “sunrise” industry, which is also tethered by a supply problem.
“In terms of the double-dip [recession in the United States], we can’t deny that it caused a drag, so we can expect a similar experience as in 2008 when there was a slowdown in the industry,” Business Processing Association of the Philippines (BPA/P) Chairman Alfredo Ayala said on Tuesday.
Ayala was responding to the BusinessMirror’s question on whether BPA/P would revise its target of $25 billion in revenues by 2016 in view of a recent World Bank revision of growth forecast for the Philippines and the snail-paced crawl of the US economy.
In 2008, the year the US economic recession began, Ayala said the growth of the business-process outsourcing (BPO) industry dipped to 18 percent from 25 percent in 2007.
“Then it picked up to 20 percent last year and we expect the same rate this year. But I want to emphasize that while that is a slow growth, it’s still a double-digit growth rate,” Ayala said during a press briefing at the first day of a two-day International Outsourcing Summit at the Sofitel Philippine Plaza.
The association, which is composed of a third of the total 760 BPO firms in the country, also targets a 20-percent growth rate for 2012. This means the industry is expected to reach $13.2 billion by next year from an expected $11-billion revenue target this year.
Worldwide, the Philippines is still the top provider of voice-based outsourcing. However, Ayala said the share of the Philippines in the global market for outsourcing, excluding Canada but including all English-speaking countries, still trails India’s 51 percent.
“Today, we’re at between 6 percent and 7 percent,” BPA/P Senior Executive Director Gillian Joyce Virata told reporters. “We can be as much as 10 percent in five years.”
However, Ayala said the 2016 target depends on the ability of the industry to address its supply ills. He noted that the industry is losing $5 billion a year because of the gap in the labor supply and demand. The demand, Virata said, is about 130,000 a year, using 2011 figures.
Ayala said the current hiring rate is only between 5 percent and 6 percent. “This means that for every 100 applicants, we can only hire five or six. If we can improve that, we can easily reach the 2016 target,” he said.
Ayala said the “$20 billion as a base case is very hard to achieve, in fact.” But he noted that the association is optimistic it can reach that figure, especially with government support.
Ayala said President Aquino is expected to unveil such infrastructure support on the summit’s last day on Wednesday.
